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France moots widening of green incentive scheme

(29 Aug 08) "Bonus-malus" system of taxes and subsidies to encourage low-emission cars could be extended to other products

The French government is considering widening its "bonus-malus" tax and subsidy scheme for encouraging low-carbon emission cars to products such as televisions, computers, tyres and light bulbs, it emerged last week.

Environment minister Jean-Louis Borloo has proposed a list of 20 product groups that could be included in the scheme as part of France's forthcoming 2009 budget proposal, according to newspaper Le Monde.  The scheme was launched in December.

It is not yet clear how the scheme would work in practice for these new products.  French finance daily Les Echos reports that the government would impose new taxes on certain products with a high environmental impact and give consumers discount vouchers for greener items.

But the extension is likely to be limited to a few product groups because the French finance ministry is concerned about its costs.  The "bonus-malus" for cars will cost €140m this year, the ministry estimates.  This is because revenues from the scheme are lower than the amount of cash given to reward buyers of greener cars.

Under the scheme, buyers of cars emitting more than 160 grams per kilometre (g/km) will have to pay a premium of up to €2,600.  Conversely, individuals purchasing cars emitting less than 130g/km will receive up to €1,000.  Cars with emissions between the two limits are not affected.

The scheme has had a much greater success than initially expected, leading to a 45 per cent increase in sales of cars emitting less than 130g/km.  In July the government announced it would tighten the rules from next January by imposing an annual tax on cars emitting more than 250g/km.

Follow-up: French environment ministry, plus articles in Le Monde and Les Echos. See also background information.

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